Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Question
### Mortgage Loan Amortization Example

To help buy her new condominium, Maria is taking out a $154,000 mortgage loan for 30 years at 3.7% annual interest. Her monthly payment for this loan is $708.84.

Fill in all the blanks in the amortization schedule for the loan. Assume that each month is \(\frac{1}{12}\) of a year. Round your answers to the nearest cent.

Below is the amortization schedule for the first few months and select points within the payment schedule:

| Payment Number | Interest Payment | Principal Payment | New Loan Balance  |
|----------------|------------------|-------------------|-------------------|
| 1              | $                | $                 | $                 |
| 2              | $                | $                 | $ 153,531.26      |
| ...            | ...              | ...               | ...               |
| 140            | $ 349.86         | $ 358.98          | $ 113,108.33      |
| 141            | $                | $                 | $                 |

Complete the table by calculating the interest payment and principal payment for each month, as well as the new loan balance at the start of each month.

#### How to Calculate Each Column:
1. **Interest Payment:**
    \[
    \text{Interest Payment} = \text{Remaining Loan Balance} \times \left( \frac{\text{Annual Interest Rate}}{12} \right)
    \]

2. **Principal Payment:**
    \[
    \text{Principal Payment} = \text{Monthly Payment} - \text{Interest Payment}
    \]

3. **New Loan Balance:**
    \[
    \text{New Loan Balance} = \text{Previous Loan Balance} - \text{Principal Payment}
    \]

Follow these steps iteratively for each payment to complete the amortization schedule.

##### Example Calculation:
For the first payment:
1. Interest Payment:
   \[
   \text{Interest Payment} = 154,000 \times \left( \frac{3.7\%}{12} \right) = 154,000 \times 0.00308333 = \$474.83
   \]

2. Principal Payment:
   \[
   \text{Principal Payment} = 708.84 - 474.83 = \$234.01
   \]
expand button
Transcribed Image Text:### Mortgage Loan Amortization Example To help buy her new condominium, Maria is taking out a $154,000 mortgage loan for 30 years at 3.7% annual interest. Her monthly payment for this loan is $708.84. Fill in all the blanks in the amortization schedule for the loan. Assume that each month is \(\frac{1}{12}\) of a year. Round your answers to the nearest cent. Below is the amortization schedule for the first few months and select points within the payment schedule: | Payment Number | Interest Payment | Principal Payment | New Loan Balance | |----------------|------------------|-------------------|-------------------| | 1 | $ | $ | $ | | 2 | $ | $ | $ 153,531.26 | | ... | ... | ... | ... | | 140 | $ 349.86 | $ 358.98 | $ 113,108.33 | | 141 | $ | $ | $ | Complete the table by calculating the interest payment and principal payment for each month, as well as the new loan balance at the start of each month. #### How to Calculate Each Column: 1. **Interest Payment:** \[ \text{Interest Payment} = \text{Remaining Loan Balance} \times \left( \frac{\text{Annual Interest Rate}}{12} \right) \] 2. **Principal Payment:** \[ \text{Principal Payment} = \text{Monthly Payment} - \text{Interest Payment} \] 3. **New Loan Balance:** \[ \text{New Loan Balance} = \text{Previous Loan Balance} - \text{Principal Payment} \] Follow these steps iteratively for each payment to complete the amortization schedule. ##### Example Calculation: For the first payment: 1. Interest Payment: \[ \text{Interest Payment} = 154,000 \times \left( \frac{3.7\%}{12} \right) = 154,000 \times 0.00308333 = \$474.83 \] 2. Principal Payment: \[ \text{Principal Payment} = 708.84 - 474.83 = \$234.01 \]
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Finance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Text book image
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Text book image
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:9781260013962
Author:BREALEY
Publisher:RENT MCG
Text book image
Financial Management: Theory & Practice
Finance
ISBN:9781337909730
Author:Brigham
Publisher:Cengage
Text book image
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Text book image
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Text book image
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education